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Michael Bloomberg announced on Sunday that he will donate $1.8 billion to his alma mater, Johns Hopkins University, to support ongoing financial aid efforts.

The question on asset managers’ minds now is how exactly Jason Perlioni, chief investment officer of the university’s endowment, will deploy the biggest-ever university donation — and to which asset classes he will allocate the funds.

The answer will be largely dependent on the structure of Bloomberg’s donation, which has not yet been revealed. A spokesperson for the university declined to comment on the matter.

“It’s a heck of a gift, any way you look at it,” said Brett Lane, head of institutional advisory services at Deutsche Bank Wealth Management.

The donation is proportionally a big chunk of the university's current assets, according to the most recent figures available online. Johns Hopkins has roughly $6 billion under management in endowment and other assets.

“The gift, with regard to their current endowment size, is enormous,” said Sam Pollack, principal of NEPC’s endowments and foundations team, by phone.

Bloomberg may also have structured his donation so that he can control how it is invested. He has already specified that the money will go toward supporting undergraduate financial aid, according to the university’s announcement.

“It is possible that the gift was made through a structure that is controlled by the donor, where they could control the asset allocation,” said Brian Caldwell, founder of ITC Fintec, a consulting firm for endowments and foundations. “This is how I would do it if I were the donor. If the gift was made directly, then Johns Hopkins or their foundation would control the asset allocation.”

That, however, may not be as palatable for Perlioni, Lane said.

He noted that a university endowment would prefer to receive an unrestricted gift, rather than one earmarked for specific uses, as it makes the allocation process simpler.

“You own the control in terms of how that allocation is donated,” Lane said of unrestricted funds.

More money for financial aid means a higher operating budget, and as a result, the university’s dependence on its endowment increases, Pollack noted. “The absolute critical element is how tightly financial aid ties the operating budget to the endowment,” he said. “It really has a material impact on how to invest an endowment portfolio for our higher education clients.”

Pollack added that his firm is seeing “pockets of opportunity.” He noted that on the equities side, special situations and growth equity are attractive areas to invest in. Core fixed income, once anathema to university endowments, is falling into favor given the rising interest rate environment, Pollack said.

Deciding where to put this much capital, he added, is “a very good problem” for the university to have.